Critical Choices & Planning for Minors
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There are two critical choices commonly faced by parents of minor children. First, who will take care of their minor children, if orphaned, and, second, who will manage the inheritance?
Guardian Guidance
If you are separated or divorced, the surviving biological parent of your minor children will continue to be their legal guardian, absent a court-proven case of unfitness. Nonetheless, parents of minor children will want to make prudent choices regarding guardianship should those children become orphaned.
While every family situation is different, here are some general pointers for your consideration when selecting guardians for your minor children:
- Select guardians who share your faith, values and life priorities; and already have an established positive relationship with your minor children;
- Consider, when selecting a married family member, appointing the family member only, in case your family member predeceases or they divorce;
- Make sure your legal plans provide for the compensation of the guardians, or at least that your children’s inheritance is available to cover all legitimate expenses incurred on their behalf; and
- Obtain the permission of the selected guardians before appointing them in your legal instruments.
Fiduciary Fulfillment
Simply put, a fiduciary is a person or an institution legally responsible for the financial affairs of another. They are held to the highest standards of care and loyalty in this role. Who will manage any inheritance left upon your death?
Practically speaking, you have three options. [If you fail to make your choices known through legal planning, the selection will be left to a judge.]
Option #1: Appoint trusted family members or friends. Upside: They likely know the strengths and weaknesses of your heirs, plus they may not charge much, if anything, to oversee the inheritance. Downside: They may be busy with and distracted by their own financial responsibilities ... and not be able to say “no” to irresponsible heirs.
Option #2: Appoint a professional fiduciary, such as an institution (e.g., a corporate personal representative/trustee). The upside and downside are the reverse of Option #1.
Option #3: Combine Options #1 and #2 for the best of both worlds. In other words, the family appointee who knows the strengths and weaknesses of your heirs will not jeopardize their relationships with your children, nor will they get bogged down with investments, accounting and tax details. Instead, the professional fiduciary shoulders (and is compensated for) the day-to-day management of the inheritance for your heirs. Plus, they can play the heavy, if needed.
Summary
Few decisions in life are more important than the appointment of guardians and fiduciaries.
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